EURUSD, Bund Yields Plunge After ECB Tells Market 'You Misjudged
Just as we warned was likely (how many times have we seen this game played), The ECB has come out this morning to explain to the market that the reaction to Draghi's hawkish speech yesterday was entirely mistaken. The reaction is clear - EUR and Bund yields are tumbling.
Vice President Vitor Constancio scrambled to set the record straight, saying the remarks were “totally” in line with existing policy and the response by investors was hard to understand.
It is very clear now that The ECB is terrified of a new bond tantrum... just as we noted earlier when previewing Draghi's parting statement at Sintra.
Analysts are now weighing whether these moves will turn into a full-scale “taper tantrum” or whether investors’ continued hunger for fixed-income assets will temper any wider selloff.
"Yesterday was the first explicit sign that be looking to remove some of the stimulus,” said Mike Bell, global market strategist at J.P. Morgan Asset Management. “Clearly not everybody was expecting that.”
"I don’t think his speech was a big surprise, but you saw the market reaction,” said Joachim Fels, global economic adviser at Pacific Investment Management Co., who attended the forum. “It’s a warning sign that there are some unintended consequences as central banks head toward the exit.”
Vice President Vitor Constancio scrambled to set the record straight, saying the remarks were “totally” in line with existing policy and the response by investors was hard to understand.
It is very clear now that The ECB is terrified of a new bond tantrum... just as we noted earlier when previewing Draghi's parting statement at Sintra.
Analysts are now weighing whether these moves will turn into a full-scale “taper tantrum” or whether investors’ continued hunger for fixed-income assets will temper any wider selloff.
"Yesterday was the first explicit sign that be looking to remove some of the stimulus,” said Mike Bell, global market strategist at J.P. Morgan Asset Management. “Clearly not everybody was expecting that.”
"I don’t think his speech was a big surprise, but you saw the market reaction,” said Joachim Fels, global economic adviser at Pacific Investment Management Co., who attended the forum. “It’s a warning sign that there are some unintended consequences as central banks head toward the exit.”